Trump can't create manufacturing jobs — but he can bring back construction

Donald Trump has made a lot of promises during his campaign that
he won't be able to keep. But he may be able to come up with
a close enough substitute for one of his big, difficult promises:
a return of manufacturing employment.

Manufacturing was long a source of middle-skill, medium-wage jobs
for men without college degrees, but employment has declined
massively over decades due to a combination of automation and
international trade.

Trump has promised to bring those jobs back, but he won't be able
to because trade policy changes only affect trade flows at
the margin, and because automation is a bigger factor in the
employment decline than trade. Contrary to Trump's claims that we
"don't make anything anymore, manufacturing output in
the United States is higher than ever, but it takes many fewer
workers to make a given amount of goods.

But there's another sector where public-policy changes could do a
lot to create new middle-skill, medium-wage jobs for men:
construction.

Trump has talked about his desire to increase government spending
on infrastructure, which would create new construction jobs.
Unsurprisingly for a real estate developer, he's also argued in
the past for tax breaks to encourage new private
construction. Even in "The Art of the Deal," he criticized the
Tax Reform Act of 1986 for disfavoring real estate investment.

Housing construction has picked up since the great recession, but
remains below normal levels. Changes to policy around mortgage
lending or low-income housing subsidies or taxation of real
estate investment could encourage more housing starts. It would
also allow Trump to say we're building things in America again.

If Trump wants a revival of blue-collar employment, he won't
have much luck with manufacturing, but he could make a priority
of encouraging both public and private expenditure on
construction.

This is a column. The opinions and conclusions expressed above are those of the author.